The industry is shrinking because most of their stuff just sucks balls lately. I don't know what it is. I look at the few games being made by SEGA in the west like sonic racing transformed, Total war series, spiral knights and I can just feel the love put into the games beside them being great games on their own. It's the little things.
But then I look at franchises like Phantasy star online, sonic and... yakuza(sorry aki) either being worse or not developing enough through time. With japanese gaming lately it feels like they're mostly concentrating on catering to people's needs instead of realising a vision and hope for people to like said project/game. Things have to be balanced. Just Listening to people isn't the real problem, but when you listen to a majority it's gonna exist of shallow/casual gamers that don't know wtf they're talking about. Devs gotta be selective. And even then, when it comes to feedback, the right mind should be able to set dumb requests apart from the brilliant ones.
Ofcourse i'm not talking about every developer. There's platinum games ofcourse and gems , like xenoblade, el shaddai, ni no kuni etc, but it's just something I noticed. I have a feeling that things are heading in the right direction in general, but sadly I can't say this about SEGA japan.
Edit: Got a bit carried away. Sorry for going offtopic